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Federal prosecutors have opened a criminal investigation into U.S. Federal Reserve Chair Jerome H. Powell.
This revolves mainly around his testimony to Congress in June 2025 on the multi-year, multibillion-dollar renovation of the Federal Reserveâs Washington, D.C. headquarters â and whether he may have made false or misleading statements to lawmakers about that project. ïżœ
Wikipedia
đč DOJ has served grand jury subpoenas to the Federal Reserve and threatened a potential indictment. ïżœ
đč The probe was authorized in November 2025 by the U.S. Attorneyâs Office in D.C. under Jeanine Pirro. ïżœ
đč No criminal charges have yet been filed, and itâs unclear whether a grand jury has formally convened beyond the subpoenas. ïżœ
The Economic Times
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Wikipedia
đ Market & Financial Impacts (Initial Reaction)
Markets moved quickly:
âą U.S. stock futures slid sharply after the news as traders price in political risk to monetary policy. ïżœ
âą The U.S. dollar weakened â reflecting reduced confidence in Fed independence. ïżœ
âą Gold spiked to record highs as investors sought safe-haven assets amid uncertainty. ïżœ
The National
The National
The National
Market sentiment appears more driven by fear of politicized monetary policy than legal specifics at this stage.
đ Fedâs Response & Political Context
Powellâs Public Stance:
âą Powell released a strong statement calling the investigation âunprecedentedâ and arguing itâs a pretext for political pressure. ïżœ
âą He directly connected the threat of prosecution to disagreements over interest-rate policy, not the renovation itself. ïżœ
âą Powell emphasized his long bipartisan service and commitment to the Fedâs dual mandate (inflation control & maximum employment). ïżœ
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Political Overtones:
âą The inquiry unfolds amid a broader Trump administration pushback against the Fedâs policy choices â especially resistance to lowering rates. ïżœ
âą Some lawmakers and former Fed leaders have warned this could erode central bank independence if political pressure becomes normal. ïżœ
Wikipedia
AP News
đ Key Questions Still Unanswered
âĄïž Will Powell face charges? No charges have been filed yet â subpoenas and investigations are not indictments. To charge someone for lying to Congress requires proof of knowing, willful misrepresentation. ïżœ
Wikipedia
âĄïž Is this purely political? Powell and critics say yes â arguing this measure is tied to rate disputes and administrative pressure. However, DOJâs legal basis is formally tied to congressional testimony accuracy. ïżœ
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âĄïž What about independence of the Fed? This situation is already signaling to markets and global central banks that monetary policy may become inseparable from politics â a deeply unsettling prospect for global confidence settings. ïżœ
AP News
đ Context â Why This Matters Globally
đ The Fed plays a central role in global finance â U.S. interest rates influence global borrowing costs, exchange rates, asset prices, and capital flows.
đ Any perceived political weakening of the Fed can ripple across equities, FX markets, bond markets, and risk assets worldwide.
đ Central bank independence was historically defended as crucial to keeping inflation expectations anchored and markets stable.
This case, even without charges, introduces unprecedented political risk into monetary policy decision-making â and that alone drives volatility. ïżœ
AP News
đ§ Quick Takeaway (Analyst View)
Key point:
This story isnât just about a historic renovation or a Fed chair under legal threat.
Itâs about a fundamental clash between political authorities and independent monetary policy â with markets reacting accordingly.
Downside risks right now: âą Higher volatility in equities & FX
âą Shift toward gold/crypto as hedges
âą Uncertainty around U.S. interest rate direction
âą Concerns about central bank autonomy globally
Upside narrative for markets: If this investigation fails to produce charges and Powell remains in place, markets might stabilize â but confidence could still be dented.
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